New threat to skilled U.S. workers
The master plan, it seems, is to move perhaps 40 million high-skill American jobs to other countries. U.S. workers have not been consulted.
Princeton economist Alan Blinder predicts that these choice jobs could be lost in a mere decade or two. We speak of computer programming, bookkeeping, graphic design and other careers once thought firmly planted in American soil. For perspective, 40 million is more than twice the total number of people now employed in manufacturing.
Blinder was taken aback when, sitting in at the business summit in Davos, Switzerland, he heard U.S. executives talk enthusiastically about all the professional jobs they could outsource to lower-wage countries. And he's a free trader.
What America can do to stop this is unclear, but it certainly doesn't have to speed up the process through a government program. We refer to the H-1B visa program, which allows educated foreigners to work in the United States, usually for three years. Many in Congress want to nearly double the number of H-1B visas, to 115,000 a year.
To the extent that the program helps talented foreign graduates of U.S. universities stay in this country while they await their green cards, it performs a useful service. But for many companies, the visa has become just a tool for transferring American jobs offshore.
Ron Hira has studied the dark side of the H-1B program. A professor of public policy at the Rochester Institute of Technology, he notes that the top applicants for visas are outsourcing companies, such as Wipro Technologies of India and Bermuda-based Accenture.
The companies bring recruits in from, say, India to learn about American business. After three years here, the workers go home better able to interact with their U.S. customers.
In other cases, companies ask their U.S. employees to train H-1B workers who then replace them at lower pay. "This is euphemistically called, 'knowledge transfer,' " Hira says. "I call it, 'knowledge extraction.' "
Another rap against the program is that it's used to depress the wages of American workers. The program's defenders argue that the law requires companies to pay "the prevailing wage."
But "prevailing wage" is a legalism, Hira says. It does not translate into "market wage."
The median pay for H-1B computing professionals in fiscal 2005 was $50,000, which means half earn less than that. An American information-technology worker with a bachelor's degree makes more than $50,000 in an entry-level job.
Businesses bemoan the alleged shortage of Americans trained to do the work. But wait a second — the law of supply and demand states that a shortage of something causes its price to rise. Wages in information technology have been flat.
The companies fret that not enough young Americans are studying science and technology. Well, cutting the pay in those fields isn't much of an incentive, is it?
The threat that they will outsource if they can't bring in foreign temps is a hollow one. "There's nothing stopping those companies from working offshore anyway," Hira says. "They're not patriotic."
This vision for a competitive America seems to be a few rich U.S. executives commandeering armies of foreign workers. They don't have to train their domestic workforce. They don't have to raise pay to American standards.
A provision for revving up the H-1B program is contained in the immigration bill that last year passed the Senate. The co-sponsors, Democrat Ted Kennedy of Massachusetts and Republican John McCain of Arizona, have contended that their legislation requires employers to search for U.S. workers first. It does not.
Skilled U.S. workers had better start looking out for their interests. No one else is.